How to Get a Loan with Bad Credit – Approved Strategies

 


Having a low credit score can make borrowing money challenging, but it’s not impossible. Whether you need funds for an emergency, debt consolidation, or a major purchase, there are strategies to secure a loan even with bad credit. This guide explores secured vs. unsecured loans for low credit scores and provides actionable steps to improve your approval chances.


Understanding Bad Credit Loans

bad credit score (typically below 580 on the FICO scale) signals to lenders that you may be a high-risk borrower. However, some lenders specialize in bad credit loans, offering options with higher interest rates or stricter terms.

Secured vs. Unsecured Loans for Bad Credit

When applying for a loan with poor credit, you’ll typically encounter two main types:

1. Secured Loans

Secured loans require collateral, such as a car, home, or savings account, which the lender can seize if you default.

Pros:
Easier approval for bad credit
Lower interest rates than unsecured loans
Higher borrowing limits

Cons:
Risk of losing collateral if you miss payments
Limited options if you lack valuable assets

Examples of Secured Loans:

  • Auto title loans
  • Home equity loans
  • Secured personal loans (backed by a savings account)

2. Unsecured Loans

Unsecured loans don’t require collateral but rely on your creditworthiness.

Pros:
No risk to personal assets
Faster approval (no collateral evaluation)

Cons:
Higher interest rates
Stricter eligibility requirements
Lower loan amounts

Examples of Unsecured Loans:

  • Payday loans (very high interest)
  • Bad credit personal loans (from online lenders)
  • Credit-builder loans

Approved Strategies to Get a Loan with Bad Credit

1. Check & Improve Your Credit Score

  • Get a free credit report (AnnualCreditReport.com).
  • Dispute errors that may be lowering your score.
  • Pay down existing debt to lower credit utilization.
  • Become an authorized user on someone else’s credit card.

2. Consider a Co-Signer

A co-signer with good credit can boost approval odds and help you secure lower interest rates. However, they’re equally responsible for repayment.

3. Apply for a Secured Loan

If you have collateral (e.g., a car or savings account), a secured loan may offer better terms than an unsecured one.

4. Explore Credit Unions

Credit unions often have more flexible lending criteria and lower rates than traditional banks. Some offer payday alternative loans (PALs) with reasonable terms.

5. Try Peer-to-Peer (P2P) Lending

Platforms like LendingClub or Prosper connect borrowers with individual investors, sometimes offering better rates for bad credit.

6. Avoid Predatory Lenders

  • Payday loans and car title loans often have APRs over 300%—use only as a last resort.
  • Look for lenders registered in your state and check BBB reviews.

7. Opt for a Credit-Builder Loan

Some banks and credit unions offer credit-builder loans, where you make payments before receiving funds, helping improve your credit.

8. Show Proof of Stable Income

Lenders may approve you despite bad credit if you have a steady job or reliable income source.

9. Borrow Only What You Need

Smaller loans are easier to approve and repay, reducing default risk.

10. Compare Multiple Lenders

Use loan comparison tools to find the best rates for your credit profile.


Best Lenders for Bad Credit Loans

Lender

Loan Type

Min. Credit Score

APR Range

Upstart

Unsecured

300+

6.4% - 35.99%

OneMain Financial

Secured/Unsecured

Not disclosed

18% - 35.99%

Avant

Unsecured

580+

9.95% - 35.99%

LendingPoint

Unsecured

580+

7.99% - 35.99%

OppLoans

Unsecured

No minimum (high APR)

59% - 199%


Final Thoughts

Getting a loan with bad credit is possible, but it requires research, responsible borrowing, and sometimes collateralSecured loans offer better approval odds and lower rates, while unsecured loans are riskier but don’t require assets.

 

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